ETF assets grow to $1.1 trillion

As of May 31, the U.S. ETF industry had over $1.1 trillion in assets under management, spread across 1,251 funds, according to data from State Street.

ETF inflows totaled more than $60 billion during the first five months of 2012. The Vanguard MSCI Emerging Markets ETF (VWO) had $8.1 billion in inflows, making it the most popular ETF so far this year. Running a close second was the iShares iBoxx Investment Grade Corporate Bond ETF (LQD), which enjoyed $5.2 billion of inflows.

The overall industry grew by $75 billion, representing asset growth of 7.1% during that period, compared with the end of 2011.

Exchange traded funds allow investors to buy exposure to a particular asset class, industry or a stock index like the S&P 500 (SPX). They have exploded in the last few years and the trend appears to be continuing as investors pull money out of traditional investment vehicles such as mutual funds.

"The ETF industry as a whole has become more reflective of what's going on in the market place," said Kevin Quigg, global head of ETF Strategy & Consulting at State Street Global Advisors. "Investors are expressing their sentiment through ETFs."

The most popular ETF category during the first half of the year was the "dividend/fundamental" group, State Street said. That was the most popular category last year and reflects the strong demand for yield in an environment where interest rates are expected to remain low for quite some time.

In the same vein, investors also flocked to fixed-income ETFs, particularly the "credit/corporate" and "high yield" varieties.

Emerging market ETFs were en vogue during the first quarter, but investors pulled $4 billion out of those funds during April and May as their appetite for risk waned.

The popularity of ETFs is in contrast to the continued exodus of investment money from mutual funds that buy U.S. stocks.

Since the beginning of the year, investors have pulled nearly $50 billion from U.S. stock mutual funds.

Stock-based mutual funds had outflows of $1.5 billion during the week ended June 27, according to the Investment Company Institute. Investors have withdrawn money from these funds for 18 of the past 19 weeks.

Ben Rooney is a staff writer for CNNMoney. He covers the European debt crisis and other international finance stories, in addition to writing about stocks, bonds, investing and other Wall Street-related news. Follow Ben on Twitter: @ben_rooney